Big Tech’s foes are lining up for battle
Oracle and the Handpulled Noodle would seem to have little in common. One is a multibillion-dollar software company in Redwood City with tens of thousands of employees all over the world. The other is a small Harlem spot that serves Chinese comfort food and is known for its tasty dumplings.
But they both say Google is unfairly hurting their businesses, and they have a new audience in Washington eager to hear about it.
After years of showing little interest,
Congress and regulators at the Federal Trade Commission and the Justice Department plan to scrutinize the power, influence and market dominance of Google, as well as fellow tech giants Amazon, Apple and Facebook.
“Obviously there is something going on in terms of monopoly,” President Trump said about large tech companies in an interview on CNBC on Monday.
Scores of other tech companies and critics, as varied as software firms and shoemakers or musicians and newspapers, have stewed for years over how, they say, some of the biggest tech firms have used their power and scale to bully them and upend their businesses.
The government is listening.
“We’re in the moment where regulators hang a shingle and say, ‘We’re open,’ ” said Luther Lowe, policy chief at Yelp and the loudest antitrust antagonist against Google. “The dozens of companies who have been quietly venting in Silicon Valley can begin to form a single-file line around the DOJ.”
Google, Apple and the other tech giants have pushed back vigorously against the idea that they act anticompetitively. They say that they compete with a broad array of firms — not just online companies — and that their services enable the growth of many small and large businesses. The big tech companies have assembled large teams of lobbyists to make their case.
The venting from their critics goes well beyond Silicon Valley. When the FTC asked for comments in 2018 on whether the modern economy required a new approach to consumer protection and competition, the commission received more than 750 letters, many targeting the tech companies.
The Retail Industry Leaders Association, the lobbying group that represents Walmart, Target, Home Depot and other major retailers, complained that the internet was now at the center of consumers’ decision-making and “controlled by a relatively small number of highly influential firms.”
Sixteen advocacy groups and think tanks jointly wrote a manifesto that argued for tough antitrust enforcement against the tech giants, accusing them of a wide variety of misbehavior, including mishandling people’s data, crippling small retailers or causing internet addiction.
And Handpulled Noodle, echoing complaints from other small businesses, told the FTC that Google sold ads on its listing in search results. The ads direct customers to delivery apps that charge steep fees and cut into the restaurant’s already thin profit margins.
“As a small business, it’s like David versus Goliath,” said Andrew Ding, owner of Handpulled Noodle. The shop’s Google listing is how most customers find his restaurant, yet, he said, he has no control over how his business is represented. There is no way for him to get rid of the ad next to the Google listing.
“Google is it,” Ding said. “I would love for small business owners that don’t have the clout or the influence to have more say about how their business is represented.”
Google said it allowed companies to place ads next to the listings of other businesses to give users more options.
The Justice Department is examining complaints against Google and Apple, while the FTC will handle antitrust issues related to Facebook and Amazon. Last week, the House Judiciary subcommittee on antitrust also announced plans for an investigation into whether the tech companies stifled competition and hurt consumers. The first hearing is scheduled for Tuesday.
In Europe, officials have been far tougher on the four tech giants. They have imposed about $9.3 billion in fines against Google in three separate antitrust cases since 2017. They concluded that Google had forced phone makers to pre-install its apps, favored its own services over rivals in search results and imposed unfair terms on companies that use its search services.
Oracle and Yelp have also taken their complaints to Europe. Ken Glueck, Oracle’s executive vice president and policy chief, said that Google’s dominance of the market underpinning online ads had enabled it to stifle competition, including from Oracle.
“We’d like to be bigger. But when you have one party who dominates the space and is acting with exclusionary conduct, that affects the market,” Glueck said.
There is a bit of a revenge backstory to Oracle’s complaints about Google: The two companies have been locked in a nine-year patent battle with billions of dollars at stake.
Yelp contends that Google favors its own services over rivals in search results in both Europe and the United States, even when the Google content is lower quality or less relevant. Google has said it tries to give people quick answers to their questions instead of sending them to another site.
In 2013, the FTC closed an investigation into Google’s search practices after the company agreed to some narrow changes.
“For so many years, U.S. companies were having to seek relief abroad because our own enforcement agencies weren’t critically examining the questionable behavior of large firms like Google,” Yelp’s Lowe said.
The European Commission also opened an investigation of Amazon in September and has received informal complaints from eBay and the European e-commerce site Zalando, according to a person involved in the discussions who was not authorized to disclose them.
A central argument against the tech giants is that other companies must use their services because that’s where their customers are. With that leverage, the argument goes, the tech giants force terms on other companies that are unfair and deepen their dominant positions.
Apple makes developers use its App Store to distribute their apps on iPhones and collects up to 30% of revenue made through activity inside the app. Spotify recently argued to European competition authorities that Apple used its App Store to punish Spotify’s app and favor Apple’s competing service.
Apple has said that it welcomes competition and that it has long helped Spotify reach customers. The only time it has requested changes to Spotify’s app is when it “tried to sidestep the same rules that every other app follows,” Apple said in a statement in March. Spotify had directed customers to pay it directly so Apple wouldn’t get a cut.
News publishers rely on Google and Facebook to send readers their way. But publishers say that to appear high on those sites, they are encouraged by both companies to use technologies that make Google and Facebook, instead of the news sites themselves, destinations for news. Google and Facebook also dominate the digitaladvertising market, the publishers say, squeezing one of their main revenue streams.
Google and Facebook said they competed for ad dollars with a wide range of online and offline services, including television, radio, newspapers and billboards. Both said their technologies helped news publishers increase ad revenue.
Google in recent years dropped an effective requirement for publishers to make their news free via Google search results, and introduced a program to help news sites increase subscriptions.
A Facebook spokeswoman said the company is working on products and training to help news outlets make more money from their articles on Facebook and had committed $300 million in the next three years to support local news.
Musicians say they must put their songs on YouTube, which is owned by Google, to reach fans, but YouTube pays below-market royalty rates. “Hopefully, these investigations drive real change to make sure fans, songwriters and artists all get a fair shake,” said Rosanne Cash, the singer-songwriter who is co-chairwoman of the Artist Rights Alliance, an advocacy group for musicians and songwriters.
Google has said YouTube helps artists reach new audiences and get paid, at the same royalty rates as Spotify.